This guide covers the frequently asked questions at Gustan Cho Associates, What are hard money lenders? What Are Hard Money Lenders? Hard Money Lenders are lenders primarily based on the assets rather than the borrower. Michael Neill, President of AXEN Mortgage, LLC, a dba of NEXA Mortgage, LLC, explains what are hard money lenders as follows:
What are Hard Money Lenders? Hard Money Lenders care about borrowers’ financials and experience in real estate. However, their main concern is the property they are lending against.
Borrower’s credit only plays a role when hard money lenders evaluate risk, and good credit means lower interest rates. This article will discuss how to qualify for hard money loans for real estate investors.
Importance of Equity With Hard Money Loans
Private and Hard Money Lenders need you to have a property with lots of equity. For Real Estate Investors purchasing a property, 25% of the purchase price is typically the low amount for a Hard Money Lender.
Hard Money Loans For Real Estate Investors close in 30 days or less. The more money a real estate investor puts down on a hard money loan, the happier the hard money lender is. Why is that? The more money investors put down on a real estate purchase, it shows the borrower has skin in the game and the less risk the lender has.
A 25-40% down payment is probably much more common. Mortgage regulators do not regulate Hard Money Lenders, and hard money and private money lenders cannot lend on owner-occupied residences. Hard money or private money loans are normally for investors of real estate properties.
What Are Hard Money Lenders Versus Residential Lenders
There are many rules and regulations regarding qualifying for FHA loans since the government guarantees all FHA-insured mortgage loans against the borrower’s default. Homebuyers can get an FHA loan with as little as a 3.5% down payment with very low mortgage rates. Lenders are insured if the borrower defaults on their FHA loan. This is not how it works with hard money or private money loans.
What Are Hard Money Lenders & How Do They Qualify Loans
Gustan Cho Associates Mortgage Group is one of the nation’s most reputable hard money and commercial lenders. It is known by many as a one-stop lending shop because there is no hard money or commercial loan they cannot do. The above is just one example.
Hard Money and Private Money Lenders typically have two really strong safeguards when they lend: A property with a lot of equity/ A borrower with a really good, common sense, well-thought exit strategy. For example, the borrower may buy, rehab, and flip a property with a $100,000 possible profit margin in a hot neighborhood.
You must think like you are a Hard Money Lender or Private Money Lender before you Google Hard Money Chicago, Los Angeles, Miami, Denver, New York, Las Vegas, or La La Land. This is because everyone lends in La La Land. So if you want a Hard Money Loan in Chicago or any other city, read what the lender states they do If you want a Hard Money loan in Chicago. You need 100% of the future value of your property, Google, I need a Hard Money Loan in Chicago, but I live in La La Land. Remember that you must be careful when choosing a hard money lender because they are not regulated like FHA or residential lenders needing to be licensed.